Hurdles remain on IMF Sri Lanka loan

[TamilNet, Friday, 01 May 2009, 03:51 GMT]While the mandate of the IMF is to assist member countries facing Balance of Payment crisis, regardless of the military or human right situation, the loan to Sri Lanka can be stopped if the law suit filed by the Tamil diaspora is successful or if the members of the Executive Committee vocally campaigned against the loan, congressional sources said.

The IMF officials said Sri Lanka is currently facing a financial collapse because its reserves are totally drying up. The $3.5b in reserves has depleted to nearly $1b, enough to cover a dangerously low 4-week of reserves. A healthy level is said to have enough for 3-3.5 months, the IMF officials said.

The IMF officials added that the they have already had multiple rounds of discussions with the GoSL on the loan both in Washington and in Colombo, and that Sri Lanka Government's statement that Colombo would not accept any conditions on the IMF loan intended for the domestic consumption, and that the loan will have specific fiscal restructing requirements.

While major news organizations reported that the United States Government is behind moves to stop or delay the loan to force Colombo to improve its human rights violation of refugees caught in the "safe zone," Central Bank officials in Colombo denied there were delays, pointing out to the progress made in the second-tier talks.

The IMF officials briefing reinforced Reuters and Guardian stories that hurdles still prevail in the Executive Level decision making, where large financial contributors to IMF such as UK or US can stop the loan for legal issues related to Sri Lanka's violation of international human rights norms, or to use the IMF loan as a leverage to force human rights improvement in Colombo's conduct in prosecuting the war.

"In Britain, a group called Public Interest Lawyers has urged the Government to vote against the loan. A similar US group is seeking a court order saying that approval of the loan would violate US law," the British online report "Timesonline" said.

Human Rights Watch (HRW) and other groups have urged the US and Britain not to approve the loan. “Sri Lanka is in a fiscal mess in good part because it massively overspent on this war,” Tom Malinowski. HRW’s Washington advocacy director, told The Times.